When a Corporation Liquidates, It Performs Three Activities

question 19

Multiple Choice

When a corporation liquidates, it performs three activities. What is the general order of these activities in a plan of liquidation?

• A)pay debts, distribute property to shareholders, and wind up its affairs
• B)wind up its affairs, distribute property to shareholders, pay debts
• C)pay debts, wind up its affairs, and distribute property to shareholders
• D)wind up its affairs, pay debts, and distribute property to shareholders

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Definitions:

Variable Expenses

Expenses that vary in relation to a company's operations.

Fixed Expenses

Expenses that remain constant regardless of production or sales volume, including items like lease payments, employee wages, and insurance costs.

Financial Advantage

The benefit gained from making economic decisions that result in increased wealth or financial health.

Average Cost

A method of cost valuation that calculates the cost of goods sold and inventory based on the average cost of all similar items in inventory.